This is a copy of an actual letter sent to one of my clients who requested a loan modification.

Note that in several places it alludes to the fact that this IS NOT an approval for a loan modification. In fact it says, “If for some reason you are not eligible for the Home Affordable Modification Program once you’ve started the trial period, we will contact you and review other options.”

How many tens of thousands of struggling homeowners got letters like this and now think their home is safe from foreclosure?

My client did – until I pointed out the above sentence.

I’ve run their numbers and I know they qualify for a loan modification. With BOA’s track record of incompetency though, I’m very worried they won’t really be approved.

So, I’ve recommended they send everything that BOA asks for via certified mail or Fed-Ex and keep copies of all cancelled checks to BOA. It won’t guarantee they’ll be approved for a loan modification or that their home will be protected, but it may help them in a lawsuit against BOA if they get screwed.

I find the wording in the letter, “review other options” particularly frustrating. Why? Because it’s more deception. There are only two other options – short sale (where BOA has a terrible record) or foreclosure.

BOA is giving homeowners nothing but false hope with this letter.

I’m sure they’re including all the loans they’ve sent these letters out to in the loan modification numbers they’re reporting to the federal government.

I expect to hear from the “Great Obama” any moment now about how his program has saved so many homes from foreclosure. Just don’t look behind the curtain or you’ll catch him hiding all these letters.

By the way, BOA (and all the major banks) keep crying that despite their best efforts, they can’t keep up with the flood of loan modification requests.

Bank of America funded $95.7 billion in first mortgages, helping nearly 450,000 people either purchase a home or refinance their existing mortgage. This funding included $23.3 billion in mortgages made to 154,000 low- and moderate-income borrowers. Approximately 39 percent of first mortgages were for purchases.

To help homeowners avoid foreclosure, Bank of America has provided rate relief or agreed to modifications with approximately 215,000 customers during the first nine months of 2009. In addition, approximately 98,000 Bank of America customers are already in a trial period modification under the government's Making Home Affordable program at September 30.

See any contradictions here?

How could they have the staff to “help” nearly 450,000 people purchase or refinance in the third quarter, but only modify 215,000 loans in 9 months?

Let’s see, that works out to 150,000 new loans per month, but only 27,777 loan mods per month.

BTW - anyone pointing to that 98,000 number already in a trial mod as good news, better reread this post from the top as well as realize that the number only represents 11% of BOA customers eligible for a loan mod.

Let’s remove another excuse banks use.

They like to claim they’re ramping up staff as quickly as they can, but still can’t keep up with the flood of loan mod requests.

Hmmm. The process of evaluating a loan mod request isn’t that much different than evaluating a request for a purchase or refinance mortgage. You gather the same documents, run the same calculations and it’s either a yes or no. Loan mods are actually a lot easier to evaluate as credit is not a factor.

Need more staff? Over one million people have been laid off from the mortgage industry. What’s more, they all know the business so they’d need very little training.

Can’t afford to hire them? Baloney. The federal government is paying $1,000/year per loan mod for up to 3 years – a total of $3,000.

The bottom line is the same senior banking executives that made the bad decisions that got our country into this housing crisis, have decided that they don’t want to do loan mods. They’d rather pursue foreclosures and use TARP bailout funds to cover any losses.

Where is the heart, courage & intelligence of the “Great Obama” on this matter?

7 comments:

"Great Obama" where is he? Somewhere in the mix of Barney Frank and Christopher Dodd as they continue to funnel the country asset's to this exclusive and elite powerhouse that we know is Wall Street. Someone please tell me how Bank of America's stock has more than doubled yet has billions of dollars in losses. I have set it before, we the working class of America MUST stop paying all monthly bills to this elite class of individuals. This is the only equalizer that, makes sense. I additionally state that they can have everything we think we own Houses, Cars, Boats, etc. We will find a new class of true capitalists that will be more honest in their business dealings. Who knows it will probably come from one of our kids. The one's we raised with soild values. The one's that did not have the elite prodigy. The one that knows what it is like to work with their hands and their brain. The one's that believes fair business competiton is not buying the politicians to get a head. Maybe this is a dream. But reality is someone's dream. If many do not realize it yet the class that has not had the ability to compete on a true capitailstic basis, now is the time that we can truly reshape our economic future. Why have we not recognized that the upper class of wealth can only keep their seperation from the working class by controlling the polticians and encourage them to keep printing money so inflation is in their favor. If you look at their exposure they hold the majority of upside down investments. Stop their cash flow as they have done to us and then watch their asset come tumbling down creating tremendous opprotunities for the ones who have put a side their current payments to take advantage of their defalted assets. Let them be accountable to their bad investments like the rest of us. THERE is NO BENEFIT BY TOO BIG TO FAIL!

My situation is hardly believable. When my mortgage-related business hit the wall in 1st qtr of '07 after an already slow year, I approached B of A and let them know my mortgage wouldn't be paid and requested a modification. They declined as my loan was not delinquent. Now, after 27 months without having made a payment and a monthly ration of BS after an original Notice of Sale some 6 months ago, they are for the third time reviewing my loan for modification. I believe my numbers qualify me for the program yet B of A has failed to even once suggest a modification or even a temporary payment. I had not had the ability to make a payment of any kind until recently. Still, they have made no proposal whatsoever. Out of necessity, I have stayed in the home, maintained it, maintained HO insurance and HOA dues in the hope that a modification might soon be proposed. We have lived in this "limbo" and felt very unsettled for over 2 years. All of this while half expecting the ugly knock on the door...I'd hate to go the BK route...but it may be the only way to get some peace.

I am the analyst of a Law Firm here in New Jersey which handles a large volumme of Loan Modification Requests. It is my experiance that currently BoA has the worst record of any lender in the loan modification area. I find that most of the loan mortgage servicers are much better at working out agreements and keeping them that any large institution. Specially bad in the FHA loans, where they deny modifications at the beginning and then when the property (which is upside down in the thousands of dollars) is ready to go to sale, then they like a miracle come up with a repayment plan. Usually, when these FHA loans have some "inconsistancies" is when they are more willing to work out a solution. The same goes for Subprime loans and perhaps some sort of Predatory Lending violations which may had occured.

I am in the New Jersey are with 18 years of experiance in the mortgage business, so I can distinguised when a file has some merit for Predatory Lending claims, and such is a big flag for some of these Loss Mitigarion departments.

I am a loan mod counselor in San Francisco, CA. B of A has a slightly different process than most lenders. They have an automated system that, if the numbers work, they can give you a trial payment quickly, but then you need to provide supporting documentation. So basically if the proof doesn't match the story, you get declined.

If you are not approved through the automated system, then it goes into the standard lengthy review process. Most other lenders go through this lengthy review as their standard process.

My company actually prefers B of A over certain other lenders because of this - our timeframe for completion is approximately 30 days with them vs. 60-90 days with some others.

The reality of loan mods is you have to fit the mold or they will not do it. Their definition of eligible borrowers is 60 days late... however based on experience you do not need to be late at all. So their 14% success rate is far, far lower. See this article... money.cnn.com/2009/11/10/news/economy/obama_mortgage_plan/index.htm

Chris, the banks want to turn us into modern day serfs that own nothing and slave away for them!

Anonymous, sorry to hear about the ax hanging over your head. Hear in Michigan, we get 6 months redemption after foreclosure and then they have to go through eviction process to remove you. So, any knock on the door just starts a minimum 30-60 day clock. Hope FNMA's new lease back to homeowners would help you out, but don't count on BOA following it.

Ismael, thanks for your comment. If only BOA would hire experienced ex-mortgage people....

Bryan, I've read where BOA has created a software package to help with loan mods. They've used the creation of it as an excuse for lagging behind on LM execution. What I haven't read is any announcement to let homeowners know they have the new system and how it works.

Overall, the problem with most of the banks is that the executive management teams do not believe in loan mods. They're too old school & arrogant to recognize the game has changed and it's not business as usual. They want to keep treating those behind on their mortgages as deadbeats. Major change won't happen until there's major changes at the top of these organizations. That change won't happen until taxpayers "vote" with their money and move it to smaller, friendlier banks.

I have had no success with B of A. Typically it takes half an hour to get someone to pick up the phone. One time after 1 1/2 hours I gave up and tried leaving a message. Guess what? The mailbox was full and I was disconnected. What employed homeowner has the time to be on the phone for that long.Band of America won't help with a short sale until after an offer is put in. Then it takes 4-6 week for them to acknowledge that they have looked over the paperwork. Up to that point they won't tell you anything.Obama didn't bail out these banks but he sure isn't helping our cause. How do we get the message to the media and Congress to get them to listen to us. We need a better process for our homneowner in the modification process with this bank. Heaven forbid you try to do a short sale. When my buyer looks at a home selling short sale and they are with bank of america I have to advise them that it might take 6 months before we have a closing. Not good.